Twenty-five years ago, while working on the advanced manufacturing team for the space shuttle’s main engine, I watched a co-worker struggling to introduce a new technology. He was charged with developing a laser welding technique to replace the finicky electron beam technology that was destroying million-dollar parts. But his potentially superior approach was abandoned because the people on the shop floor resisted the change. It was the first time I saw an innovation effort fail because of context, and I never forgot it.

Since then, and especially while leading efforts to commercialize research at two universities, I’ve repeatedly seen how the complex systems of partners, resources, infrastructure, and cultural norms that surround most innovation efforts influence their outcomes. In today’s complex and rapidly changing world, innovators ignore this context at their peril. This year’s best business books on innovation help mitigate the risk by examining context from three different, but complementary, perspectives.

Innovation Ecosystems

Sony ignored context when it delivered the first truly viable electronic reading device without an easily accessible, fully stocked e-bookstore — and suffered the consequences. As Ron Adner, a professor of strategy at the Tuck School of Business at Dartmouth College, describes it, Amazon’s late-arriving, inferior Kindle quickly surpassed Sony’s e-reader and achieved market dominance because of Amazon’s partnerships with publishers and superior content platform.

Adner provides an approach and a tool kit for avoiding Sony’s fate in his book The Wide Lens: A New Strategy for Innovation. Written in a style and format similar to those of books like Geoffrey Moore’s Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers (HarperBusiness, 1991) and Jim Collins’s Good to Great: Why Some Companies Make the Leap…and Others Don’t (HarperBusiness, 2001), its well-structured chapters are studded with numerous case studies designed to help readers think about their company from a fresh perspective — in this case, the ecosystem in which they innovate.

In Part I, the author describes two common contextual blind spots: the “co-innovation risk” of not considering the suppliers and other partners necessary to bringing a solution to market, and the “adoption chain risk” of not considering which players are needed to ensure that end-users can fully realize the value offered by the solution.

Parts II and III, the remainder of the book, are devoted to avoiding these blind spots, starting with what Adner calls a “value blueprint” of the innovation ecosystem. This blueprint identifies the end customer, the project deliverables, the suppliers needed to build the solution, the intermediaries and “complementors” needed to deliver it, and the vulnerabilities in the system.

Despite the allure of being the leader of an innovation ecosystem, Adner cautions companies about jumping onto this high-risk path too quickly. It typically involves a huge investment and delayed payoffs — not to mention the fact that many companies do not have the influence or platform needed to lead. Assuring us that the first-mover advantage is a myth, he suggests that the role of fast follower may make much more sense for many; he uses the often-cited Apple iPod as an example of a blockbuster product that was deliberately released years after the first competitor was on the market. (See “The Value of Being Second,” by Oded Shenkar, s+b, Author’s Choice, Sept. 28, 2012.)

In addition to familiar success stories like the Kindle and iPod, Adner includes lesser-known examples of creative solutions devised to overcome contextual obstacles. For example, high-quality digital cinema seemed like a no-brainer in the movie industry, especially for the studios that were spending US$3,000 per theater to print and ship film. But theater owners could not afford the new equipment required to screen digital films. This delayed digitization by 10 years, during which time the studios continued to pay unnecessary costs and moviegoers did not get the benefit of digital viewing. Eventually, the industry pulled together a “virtual print fee” program to address the logjam. This system introduced a new player to the ecosystem, the “digital theater integrator,” which purchased the new screening equipment and installed it in theaters on a lease-to-own basis. The studios shared the cost by paying the digital integrators a $1,000 virtual print fee for each film they sent to the theaters. This win-win-win solution cleared the way for digital cinema and created a platform for other innovations, such as 3-D movies.

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